You are here

SWOT Analysis

For your business to thrive, it is important to have a clear strategy in place; but sometimes it is hard to know where to start. Conducting an analysis of your company’s strengths, weaknesses, opportunities and threats may be a very helpful tool to get your business on track. This is called a SWOT analysis.

SWOT analysis is a simple, yet a very valuable technique developed to help companies look at their internal and external issues, and identify available opportunities or overcome existing obstacles to achieve a certain objective.

Strengths and Weaknesses refer to your company’s internal factors (tangible or intangible) that are within your organization’s control. Opportunities and Threats refer to your company’s business environment, and they are out of your company’s control. This is why SWOT analysis is often referred to as Internal--External analysis. Opportunities and Threats may be current or future (e.g. new legislation expected to be passed). It often seems that there is not much you can do to prevent these external factors from harming your business, but being proactive and watching for potential threats can prepare you to tackle them as they arise.

Conducting your SWOT analysis may be time-consuming. You should take a good look at each of the four parts of the analysis and ask realistic and demanding questions to get a good grasp of where you stand in relation to them.

Once the table has been completed, prioritize which strengths, weaknesses, opportunities and threats are critical for your business, strategize on how to address them, and then take action on your plan.

Strengths. Think about how your strengths help reach your objectives and how you can maintain and use them more effectively. Leverage existing strengths to take advantage of the opportunities and reduce probability of threats.

Opportunities. Decide on how to capitalize on opportunities using your strengths. Prioritize which opportunities you want to pursue first and assign any needed resources.

Threats. Make a plan on how to minimize, manage or avoid the effect of threats to your business.

Maximizing your strengths and opportunities and minimizing the weaknesses and threats that your organization faces allows your business to become more competitive. Additionally, as you complete your SWOT analysis, you will have a solid foundation for crafting your company’s strategic plan.

The material in this work is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. IFC does not guarantee the accuracy, reliability or completeness of the content included in this work, or for the conclusions or judgments described herein, and accepts no responsibility or liability for any omissions or errors (including, without limitation, typographical errors and technical errors) in the content whatsoever or for reliance thereon

2121 Pennsylvania Avenue, N.W., Washington, D.C. 20433, www.ifc.org

The material in this work is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. IFC does not guarantee the accuracy, reliability or completeness of the content included in this work, or for the conclusions or judgments described herein, and accepts no responsibility or liability for any omissions or errors (including, without limitation, typographical errors and technical errors) in the content whatsoever or for reliance thereon.